Company says it will continue operating as normal as it works toward a more viable capital structure
Borden Dairy Co. has filed for Chapter 11 bankruptcy reorganization, becoming the second large U.S. dairy company to do so in recent months.
In an announcement on its website, the company said it would “continue operating as normal as it works toward achieving a more viable capital structure.” Borden said it will use the restructuring process to reduce its debt load, maximize value and position the company for long-term success.
“This reorganization will strengthen our position for future prosperity,” said Borden CEO Tony Sarsam. “Over the past 163 years, we have earned the distinction of being one of the most well-recognized and reputable national brands. We remain committed to ‘The Borden Difference,’ which is our promise to be the most service-oriented dairy company that puts people first. We will continue serving our customers, employees and other stakeholders and operating business as usual throughout this process.”
The company said that, despite its increased sales last year that outpaced the industry, it has still been hit hard by the rising cost of raw milk and market challenges.
“These challenges have contributed to making our current level of debt unsustainable,” Sarsam said. “For the last few months, we have engaged in discussions with our lenders to evaluate a range of potential strategic plans for the company. Ultimately, we determined that the best way to protect the company, for the benefit of all stakeholders, is to reorganize through this court-supervised process.”
Borden was founded in 1857, is based in Dallas and has 3,300 employees. It operates 13 milk processing plants and nearly 100 branches across the U.S. that produce and distribute nearly 500 million gallons of milk annually for customers in the grocery, mass market, club, food service, hospitality, school and convenience store channels.
Borden becomes the second large dairy company to file for bankruptcy in recent months. In November, Dallas-based Dean Foods filed for bankruptcy and initiated the sale of “substantially all assets.” Dean Food and Dairy Farmers of America have been involved in talks for a potential acquisition.
In recent years, the dairy industry has faced thinning profit margins, falling milk prices, lower consumption and higher feed costs.